ArticleBizTime: Old Brands In Trend (2)
Hu Fengdi, Sales Manager
The manufacturer can only earn
1 to 2 yuan for making a pair of classic Feiyue sneakers.
She declined to give details about the margins. But industry insiders estimate the wholesale price of Feiyue sneakers to be around two dozen yuan. In China, Top One is a major producer of Feiyue sneakers. And yet it's been stuck in the red. The company posted a loss of more than 10.5 million yuan in 2006, and 15 million in 2007. Last year, its net loss widened to nearly 24 million. A senior company executive at Lansheng Corporation, Top One's parent company, told ICS on the phone that all its Feiyue shoes are now sold domestically.
Chen Xiaohong, Deputy GM, Shanghai Lansheng Corp
You
can't expect great prices for those shoes on the domestic market. Nobody here
would pay 50 euros for our products. Even 10 euros would be considered too much.
If Top One is not exporting and is losing money, who is making all the best-selling sneakers in Europe? And who gets the profits? As we dig deeper into these questions, a potential legal dispute centering on the Feiyue brand looms large.
Feiyue's move to Europe has been retold in many media reports. It goes like this, a French artist named Patrice Bastian discovered the canvas sneakers in Shanghai several years ago. He was immediately fascinated by the design. So he went to the manufacturer Top One, where he received authorization to modify the sneakers before selling them in Europe.
The modified versions later proved a success, with at least 70 entries in first-tier fashion magazines over the past three years. In order to find out why Top One is losing money while the French varieties are popular, we consulted the French company for details of their partnership, but their answer was puzzling. In an email to ICS, a co-owner of French Feiyue said: "We are currently holding some discussions with legal entities in China and we cannot communicate on Feiyue to Media based in China until those talks are completed." We then turned to a senior executive at Top One's parent company for more information.. He sidestepped the question concerning Top One's partnership with French Feiyue, but instead, ushered in a question related to the ownership of the brand.
Chen Xiaohong, Shanghai Lansheng Corp
We are in a
trouble related to Feiyue's ownership. Everyone would like to own this brand.
Another company also wrote to us, claiming ownership of the Feiyue brand. But I
won't name it.
The executive declined to give any further details. So we searched brand information on the Web site of the Chinese trademark regulator, which shows there are two registered Feiyue trademarks in China. Neither of them belongs to Top One. They are, instead, entitled to Shanghai Da Fu Rubber Company and Double Coin Holdings, both of which are subsidiaries of the same state-owned group. In his small downtown office, Liu Wangsheng, a senior Da Fu executive explained to us how the confusion took place. Liu said Da Fu formed a venture called Wen Da with Lansheng Group in August 1993 to make Feiyue sneakers. Three months later, Wen Da set up Top One as a subsidiary. In 1997, Da Fu sold its stake in Wen Da to Lansheng, but agreed to have Top One produce Feiyue-branded sneakers for 17 years without charging it any fee. Wen Da was closed in 2005, with Top One taking over its assets. Some reports say Top One later authorized the French to operate the Feiyue brand overseas.
Liu Wangsheng, Manager, Shanghai Da Fu Rubber Company
It
was not until early 2008 that I read about a report saying Feiyue was registered
by the French in Europe and had become popular there. Then I wrote to Top One
twice, asking it to explain what happened between it and the French, but have
got no reply so far.
French Feiyue's logo on its Web site is followed by a circled R, indicating Feiyue is already a registered trademark in Europe. Wu Dong, a partner at M&A Law Firm, said Feiyue reminds him of a trademark infringement case concerning China's century-old "Wangzhihe" brand. A Bavarian court in April ordered a German company to stop pirating the logo and trademarks. It was hailed in the Chinese media as the first victory of a time-honored brand in defending its intellectual property rights overseas after China joined the WTO.